Retailer Zamel's fined $250,000 over jewel sales scam

A MAJOR jewellery chain has been fined $250,000 for duping customers with inflated discounts in sales advertisements.

The Federal Court has ordered the penalty against Jewellery Group Pty Ltd, trading as Zamel's.

The punishment follows a decision last year that the company breached the Trade Practices Act by using misleading "dual pricing" in catalogue and flyer sales promotions promoting huge savings.

Dozens of items including pendants, chains, bracelets and earrings were advertised with statements such as "was $275, now $149" and "was $139, now $69" or featured a "strike through" price with a line drawn through it.

But the court found Zamel's regularly discounted and did not sell, or rarely sold, the goods at the higher price before the sale.

The Jewellery Group yesterday said it intended to appeal against the decision, warning the "very disappointing" judgment had "significant implications for all of retail in Australia". It said its actions were consistent with "widespread industry practice".

"Zamel's has at all times acted in a way that it believed was compliant with its legal obligations, and consistent with widespread industry practice," it said in a statement.

Justice Bruce Lander said the penalty, relating to a May 2010 Mother's Day catalogue, reflected the seriousness of deliberate conduct and a need to deter others.

"At the time the catalogue was published, Zamel's had a vigorous discounting policy, which meant that Zamel's customers rarely paid the ticketed prices of items during the periods outside (the) catalogue sales period," Justice Lander said.

About 3.6 million catalogues were distributed nationally. The legal action was instigated by the Australian Competition and Consumer Commission, which had sought a $600,000 fine.

University of Melbourne consumer psychologist Dr Brent Coker said people often were suspicious of sales but still let themselves be duped into buying anyway.

"Humans are not logical from a psychological perspective, the accuracy of our decisions are never as accurate as we think they are," Dr Coker said.

"It is not really the price that matters it is the the price gap. The bigger the gap the more likely we are to buy.

"It is also the scarcity thing, we have all been bitten by wanting to buy something but we left it and then we go back and it is gone, it is a bad feeling and we don't want to feel it again."

Dr Coker said the sale sign helped us override any logical thinking.

He recommended purchasers should wait longer before purchasing or check the real price on their smart phone before we buy.